Point-of-Sale Systems: The Impact on Customer Loyalty

by Will Lockwood
What’s one of the most powerful ways to impact your pharmacy’s business with tools that are most likely already in your point-of-sale system? Customer loyalty, built and rewarded by increasingly sophisticated POS modules. There are pharmacies out there in every stage of adoption with these POS-driven loyalty programs, both those just getting started and old hands, as well as pharmacies that have been upgrading their POS systems and gaining new loyalty program functionality as they do

Setting the Parameters

One hallmark of a full-featured customer loyalty module is that it offers you the flexibility to set the parameters for points awarded, redemption levels, and the items that earn rewards. This is because, while the overall goal of cultivating customer loyalty may be the same, different pharmacies will want to go about this in different ways.

First, there’s setting the relationship between dollars spent and points earned. For example, Larry Kaufman at Smith Bros. Drug Co., who has recently begun using the loyalty module in his Retail Management Solutions POS, chose to start out by offering one point per dollar spent. At MediSav Pharmacy, Jamie Schmalz has set the rewards program module in her Computer-Rx POS system so that loyalty members earn 100 points for each $1 spent; 10,000 points earns a $5 coupon. “We are able to determine these parameters ourselves,” she says. “We feel that giving more points per dollar makes the program more appealing.”

Smith Bros. Drug Co.

Maple Shade, N.J.

Larry Kaufman, R.Ph.

Owner
A busy independent store with a large front end that Kaufman is trying to grow, bringing
in new categories of items.

“I am devoting energy to the front part of the store, and I felt that the loyalty program from Retail Management Solutions would enhance my efforts.”

Then there are other areas that you need to be able to customize, such as what earns points and how many points any item can earn. “We can tag the items that do or don’t earn points easily,” notes Kaufman. “For example, no points on prescriptions or items that we’re heavily discounting.” You also want to have the flexibility to set bonus points or point multipliers by time or item in order to tailor your loyalty program to your specific goals. “At MediSav we have added a standard bonus point multiplier for our branded generic OTCs,” notes Schmalz. “This is a good way to drive sales in these areas and emphasize the extra value our club members get from these products.”

MediSav also has a standard bonus of 10,000 points for each new club member. “When you tell people they are going to earn 10,000 points just for signing up,” says Schmalz, “they get excited about that.” But you don’t have to make these kinds of added incentives a standard part of your program. Northside Pharmacies, for example, which is rolling out the Epicor Eagle POS system, complete with its loyalty module, uses point multipliers and bonus points in a more targeted manner. “Sometimes for a monthly promotion we’ll offer double points,” says Danielle Spires. “And then at times we’ve offered 100 bonus points at initial sign-up. That clearly costs us more in the long run, but it is good to be able to offer incentives like this in a flexible manner.”

Jeany Young at Young’s Pharmacy has set the Loyalty Points module within her ECRS Catapult system to offer double points specifically on Sundays, traditionally the pharmacy’s slowest day. “There are people who obviously are waiting to come in on Sunday to do their shopping,” she says.

And beyond offering points, you should be able to key on members’ personal details to generate benefits. A good example of this is the 20% off birthday coupon that Northside Pharmacies sends out to rewards members.

MediSav Pharmacy

Fort Smith, Ark.

Jamie Schmalz

Director of Operations, IT, and Compliance

Pharmacy group that will celebrate its 50th anniversary in November. Offers a range of clinical services, compounding, DME, and a large gift selection.

“We launched the loyalty program the week before Thanksgiving in 2013. So we’re new to it and I think as a concept this is fairly new to independent community pharmacy.”

Dynamic and Focused

Arobust loyalty module gives you the flexibility to design your program to suit your needs and to adjust it as your needs change. Jeany Young, for one, takes a dynamic approach in using the features in her POS to run her program, called Shoppers Club. “I adjust the points or exclude items from being eligible for points based on my margins,” she says. She has used targeted bonuses above and beyond her Sunday specials as well, such as triple points over Black Friday weekend. And she’s looking to her loyalty program to help her launch a nutritional supplements department, where special rewards incentives are part of her marketing.

Flexibility also allows for focus. John Anderson, who is a clinical nutritionist in addition to being a pharmacist, has developed a specialty in providing wellness consultations at Wimberley Pharmacy and selling lines of supplements that are designed to address the issues that may come up in these assessments — for example, a need to balance hormone and energy levels for patients. These are lines of wellness supplements and products that are available only through professionals. Clearly, creating a niche around specialized front-end products like this is good. Nevertheless, Anderson emphasizes how important a loyalty program still is. In fact, Anderson has focused the rewards program within his PioneerRx POS system specifically on these wellness items, adding an extra incentive to the expertise he offers his patients. “Even though these wellness products are professional products, my customers can get them elsewhere,” he says. “But I’m where they can get the supplements, benefit from the personal counseling and advice we can offer, and earn rewards, too.”

Tracking and Redeeming

Just as it should be easy for you to award points and incentives in your own way, you will also want a loyalty program that lets you choose how members can redeem points. What’s important here is to balance what’s best for achieving your program goals with what’s convenient and appealing to the program members.

Pharmacies such as MediSav and Northside choose to issue awards only after members reach specified points levels. On the other hand, both Wimberley and Smith Brothers are allowing immediate redemption once an award is available.

“When a member earns a reward, we prefer to send a color coupon in the mail with our monthly sales flyer,” explains Schmalz. “That really prompts the customers to come back in and use the coupon on a return visit. Right now we are getting back 75% of the coupons we send out, which I think is pretty good. I’ve been impressed with the number of people who bring them back in.”

Northside Pharmacies

Zanesville, Ohio

Danielle Spires
System Coordinator
Pharmacy group affiliated with Genesis HealthCare System, with locations that feature large front ends as well as a range of clinical services and programs that cater both to retail patients and health-system needs.

“Our goal is to give our customers rewards for making Northside Pharmacies their pharmacy of choice. We want our customers to feel appreciated and keep coming back, with specials and sales tailored to the rewards customers.”

Larry Kaufman, on the other hand, who is currently allowing members to redeem awards immediately, sees a benefit in keeping things simple while he’s getting his program going. “The Retail Management Solutions program allows us to send out certificates that members will redeem on a return visit,” he says. “And that’s something I want to do, but I’m just trying to get up and running right now and gain members in the program. So that will come soon.” But immediate redemptions can have a role even in more established programs such as John Anderson’s at Wimberley Pharmacy, which is now well over two years old. “Once a member accumulates enough points for a $10 reward, the cashier gets an on-screen prompt in the PioneerRx POS and we let the customer redeem the reward immediately on anything in the front end,” Anderson explains. In this case, he is valuing the instant gratification a member gets from cashing in earnings right away, and relying on his specialized offerings and the prospect of future rewards to bring customers back the next time.

Young’s Pharmacy

Bethlehem, Pa.

Jeany Young, R.Ph.
Owner

Young is a fourth-generation pharmacy owner who purchased the pharmacy from her father in 1994. She expanded the store to 5,000 square feet and now has a large front end with a card department and a growing nutritional department.

“Try to run specials for at least a month to give customers and staff enough time to internalize the marketing.”

Next you want to be sure that it’s easy for loyalty program members to know how many points they have and how close they are to a reward. Kaufman’s Retail Management Solutions system puts the points earned right on the receipt each time. “This is nice,” he says, “because people don’t have to keep track of it themselves. We let them know automatically each time they shop.” Jeany Young is using the same kind of functionality in her ECRS software at Young’s Pharmacy, where customers had previously had to get a card punched to track their rewards and then later log into a website to view and redeem rewards. Since Young upgraded to ECRS’ automated system, points appear both on the customer receipt and on-screen for the cashier to see.

Marketing Rewards, Marketing Your Pharmacy

When it comes to marketing your pharmacy, a strong rewards program is both something to talk about and a marketing channel in itself. Jamie Schmalz at MediSav Pharmacy offers a good example of how to apply a substantial amount of savvy to your loyalty program as a piece of marketing.

“We have very loyal customers already, and we want to let them know that we appreciate their business,” says Schmalz. “At the same time we are looking to appeal to new customers who may shop with the chains because they like the perks they get there. We know that we are able to offer the same kind of perks, and so we are focused on making sure we have the marketing in place to let customers know, too.”

Wimberley Pharmacy

Wimberley, Texas

B&J Pharmacy

San Marcos, Texas

John Anderson, R.Ph.
Owner
Retail pharmacies offering a large wellness section stocked with professional OTC items and a gift area. Clinical services include wellness consultations, DME, and compounding services.

“The loyalty program has really helped the front-end retail aspect of my business. We want to inspire loyalty by providing points to use in the store.”

In order to make the most of your program, Schmalz advises putting some thought into the name and a logo design, which will go on any cards or keychain tags you give out. This marketing material can also go on any materials you use to promote the program, such as a section of your website, social media, mailers, and award certificates. “We wanted a name that was catchy and related to us and that was clearly about a rewards program,” Schmalz says. “I got staff input on this, and we came up with the MediSavers Club.” She then contacted the local university and had one of the graphic design students help with the design of the membership card. “None of this is a requirement for launching your loyalty program,” she says. “But we wanted to take advantage of this chance to present a strong brand image that is going to put us at the top of customers’ minds.”

Larry Kaufman went with keychain tags for his program, and he too sees the value in branding these correctly. In his case, Retail Management Solutions provided templates to which Kaufman could add his logo and apply his store colors. “This is really a small ad that you can get your customers to carry with them,” he points out. “Whether it is in their wallet or on their key chains, they look at it and see Smith Brothers Drug Co.”

The notion of rolling out a loyalty program in a big way might even seem a little overwhelming. But it’s an opportunity you don’t want to pass up, with big benefits for customers and the pharmacy.

Schmalz also has good advice for marketing your new program. In this case, she reports that MediSav sent out 9,000 direct-mail pieces that introduced the program and included a coupon for a digital bathroom scale for $4.99. “The scale was customized with our logo and website,” says Schmalz. “We had a lot of people respond to that campaign, and as they came in to purchase the scale they signed up for the MediSavers program as well.”

One side note is that, while the club card or key chain card makes for a nice reminder of your pharmacy and your loyalty program, we all know that customers may not always keep these with them. So it’s important to be sure that there are other ways to look up a member and ensure that he or she earns points on a purchase. And it’s typical to be able to look up members in POS-based loyalty programs by such standard identifiers as name, address, phone number, and date of birth. For example, Danielle Spires at Northside Pharmacies points out that they are able to look up loyalty program members by address or first and last name, and that the ability to look up by phone number will come when they are fully converted to the Epicor Eagle system.

Streamlining Sign-up

Your goal should be to ask every customer who makes a transaction at your pharmacy to join your loyalty program. One way to make sure your staff is doing this is through prompts from the software. For example, according to Danielle Spires, the very first question staff at the register at Northside Pharmacies ask is “Are you a rewards customer?” And the Epicor Eagle system they are converting to issues a prompt for this question both at the beginning and at the end of the sale, which Spires sees as ensuring that staff are engaging customers about sign-up consistently. Also, make sign-up simple. Ask for only basic information, such as name, address, phone number, permission to text, email address, and date of birth. Consider using a card or sign-up sheet so that new members aren’t announcing their personal details to whoever is behind them in line and the cashier isn’t struggling to keep up or get names or emails right.

Consider using a card or sign-up sheet so that new members aren’t announcing their personal details to whoever is behind them in line and the cashier isn’t struggling to keep up or get names or emails right.

Larry Kaufman has a simple but effective way to be sure that he’s getting the details from his sign-up cards correctly linked up with the membership number he’s giving out. He has Smith Brothers staff write down the last five digits of the club number on the card, so that they can go back and enter the information later. “This avoids slowing down checkout too much when someone first signs up, and trying to get names and emails right, without seeing them written down,” he says. “We scan the ID into the system right away, so there are points for the first purchase. Later we can match the digits on the registration card with the ID in the system. It’s pretty easy for us.”

Motivating Staff

Just as we’ve seen incentives that encourage customer sign-up, such as special offers and bonus points, there are also ways to motivate employees to champion a customer loyalty program. Larry Kaufman took the straightforward approach of offering staff 50 cents per member signed up during the first month of his new program. “I figured that even a small financial incentive would help me get members for the program and accustom staff to asking shoppers to join, particularly when combined with the system prompt” he says. “Our cashiers responded well.”

These incentives for employees don’t have to be for one time only or just at the start of your program. Northside Pharmacies runs occasional contests, both within a store and between locations, with rewards to individual staffers with the most sign-ups and perhaps a pizza party for all staff at the most successful location.

Insights from Reporting

Your POS system is full of important sales data. But stop for a moment to consider how much more valuable this information is when you can attach it to the buying preferences of your best and most loyal customers. Jeany Young, for example, tracks results using reports from her ECRS POS that show sales by department before and after a Shoppers Club promotion. In this way Young is actually able to see how her loyalty program moves the revenue needle. “It’s all driven by the ECRS data,” she says, “and I can easily customize it based on my current goals.” Young has been able to see the impact, for example, within the nutritional department, where the sales reports have shown that promotions really made a difference to her overall profits.

The information collected in the POS by a loyalty program can also impact pharmacy operations when the systems are properly integrated, even though regulations prohibit incentives from applying to all prescriptions.

John Anderson is also successfully leveraging reporting in his PioneerRx POS to gain extra value from his loyalty program. Even though members earn rewards primarily for purchases in Wimberley Pharmacy’s wellness department, the loyalty program means that all their purchases in every department are easily tracked. Anderson can then review members’ needs through this purchase history. “I’ll look for my best customers,” he says, “and I’ll put in additional bonus points to reward them and thank them the next time they come in. Or I can flag a customer for a free product that he uses a lot of.” These gestures are powerful ways of maintaining goodwill. And then Anderson can use the sales histories in an ad hoc fashion when a customer comes in and says, for example, “John, I bought this item a while back, during the flu season. I want it again, but I can’t remember what it is now.”

Anderson can easily do a little research and go back to the customer with exactly what he or she bought and when. None of this is possible if you aren’t employing a loyalty program to tie together customers and your item sales histories.

The information collected in the POS by a loyalty program can also impact pharmacy operations when the systems are properly integrated, even though regulations prohibit incentives from applying to all prescriptions. MediSav Pharmacy, for example, offers a prescription savings program that’s separate from MediSavers and run out of its Computer-Rx pharmacy management system. “One important thing we do is to look at each new rewards program member in the Computer-Rx WinScan POS to see if he or she is eligible to be part of that separate prescription savings program,” says Jamie Schmalz.

Building Out Your Program

The nice thing about having a robust loyalty program is that there’s usually something more you can do to take it to the next level. For example,Jamie Schmalz reports that MediSav has stopped giving department-wide discounts. “Now we are being more targeted about what items within a department have incentives,” she says. “We run these through the loyalty program. This is good because then we are appealing to our best customers and not just shoppers who are looking for a sale.” Since Schmalz knows which items are popular with the MediSavers members, she can be very specific about what goes on special.

Anderson can easily do a little research and go back to the customer with exactly what he or she bought and when. None of this is possible if you aren’t employing a loyalty program to tie together customers and your item sales histories.

Schmalz is also thinking about taking advantage of the ability to run multiple rewards programs with the Computer-Rx POS to create special club segments. “I can see an opportunity for something like a vitamin club or a club for our gift department,” she says. “I think it would be really simple to do something like that, and it will appeal to customers. But since the MediSavers program is still new, I don’t want to create any confusion by introducing other programs too soon.”

For another example, Larry Kaufman is looking forward to rolling out two advanced features offered by Retail Management Solutions. The first is status levels. “We can create tiers, such as silver, gold, and platinum,” he says. This will afford Kaufman the ability to really target his best customers with specific offers or special perks based on their status. “I know people like gaining status in a program, and I know our customers are going to like to have offers that reflect their status,” he says. Second, Kaufman is excited at the prospect of the advanced gift-with-purchase features in his system, which, for example, will allow him to print a coupon when a customer buys a specific item. “If you buy a toothbrush, then the system prints a coupon for toothpaste,” he explains. “You can set these rewards up with start and stop dates, and I think it’s going to be a nice way to encourage future visits and take advantage of the way POS can help us understand what items people like to buy together.”

Jeany Young has even found a way to use her loyalty program to help members give back to the community. “We have a feature in the ECRS Catapult POS that allows customers to donate their points to charity,” she says. “Last year we had a different charity each quarter, and our staff just had to select on the POS screen if the points should go toward the member’s account or to the charity.” A report then let Young know the amount to send to the charity at the end of the fundraising drive.

Start Small to Go Big

There’s so much opportunity for community pharmacy loyalty programs: points and coupons; promotions around specific OTC items; and rewards based on member behavior to name just a few. The notion of rolling out a loyalty program in a big way might even seem a little overwhelming. But it’s an opportunity you don’t want to pass up, with big benefits for customers and the pharmacy, as Jeany Young can attest. “Our customers love our program. They are adamant about it,” she says. And she loves it, too. “The goal with the loyalty program was to increase sales and keep customers happy, and we’re doing just that,” she says. That strong connection with your customers, reinforced in tangible ways, is so important in separating you from your competition, notes John Anderson at Wimberley Pharmacy. “We have one competitor in town,” he says, “and while we know that when a customer comes to see us she is going to see friendly faces, it also important that she knows that we recognize her and value her patronage through our loyalty program.”

And with all this to think about, Larry Kaufman has some sage final words of advice: “I feel that to do something right you have to start out somewhere, and you can’t try to do it all at once,” he says. “We just rolled our program out at the beginning of May, and it’s really not hard to get started. You could do it in a couple of weeks.” And from there, it’s just a matter of finding out what your POS system’s program can do for your pharmacy and your customers. CT

Will Lockwood is a senior editor at ComputerTalk. He can be reached at will@computertalk.com

Get Customers into the Store

Ken Villani’s philosophy at Cottage Pharmacy in Woodbury, N.Y., has always focused on finding creative ways to build his business. Offering his customer a loyalty program through his DataScan point-of-sale system is part of the plan.

What are the goals for your loyalty program?

Our goal is to get our customers to do more of their shopping in our store.

How are you signing up members for your loyalty program?

We input information into the point-of-sale system rather than filling out applications.

How do you assign items to the program?

The only things that do not count toward the loyalty program are items that are on sale or discounted.

Do you assign point multipliers and/or discounts to highlight products?

We are actually running double points every Saturday for the summer and have done this in the past.

Do you run more than one loyalty program?

We only run one loyalty program. We have a point scale for every dollar spent on over-the-counter items.

How do you encourage sign-up?

We’ve offered 10% off next purchases in the past.

How do you incentivize staff to promote the program and sign customers up?

No incentives — it’s just become part of the job and a form of habit.

Can you create family accounts to aggregate points/ rewards?

We have one account for each family, unless a family member would like his or her own.